China is now the biggest creditor in the world at 5 trillion dollar, said an extensive new study by Sebastian Horn and Christoph Trebesch of the Kiel Institute for the World Economy, and Carmen Reinhart of Harvard University.
It has further said that Chinese state owned banks have surpassed World Bank and International Monetary Fund in granting loans to emerging and developing countries and that 50 percent of the Chinese international lending is not included in official statistics. All the Chinese loans is said to be from state-owned banks.
The study also highlighted that the magnanimity of Chinese lending abroad accounts to 8 percent of the World’s GDP. The Chinese loans, which is given in market interest rate, is said to benefit the recipient countries in terms of infrastructure. In return, the Chinese is said to have put, inter alia, collateral clauses for repayment in kind such as oil exports etc.
The findings have put Chinese loans to 40 percent of the total external debt for the top 50 recipient countries which are mostly small and poorer countries. It has also said that China holds 10 percent of German GDP and 7 percent of the euro area GDP which accounts for 370 billion USD of German Bunds and 850 billion USD of bonds for the whole of Europe respectively.